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WEEKLY NEWSLETTER
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Sudan
Index
Foreign capital has played a major role in development. The
great reliance on it and the general ease with which it was
acquired were major factors contributing to the severe financial
problems that beset the country after the mid-1970s. Sudan
obtained public sector loans for development from a wide variety
of international agencies and individual governments. Until the
mid-1970s, the largest single source had been the World Bank,
including the International Development Association (IDA) and the
International Finance Corporation (IFC). By 1975 the World Bank
and its organs had furnished the equivalent of US$300 million.
Excluding repayments, the outstanding amount had risen to US$786
million in 1981, as major commitments to projects including
agriculture, transportation, and electric power were made
(chiefly by IDA, which accounted by 1981 for more than US$594
million of the outstanding total).
The Arab oil-producing states, as their balance of payments
surpluses grew in the 1970s following increases in world
petroleum prices, also became significant suppliers of
development capital through bilateral loans and Arab
international institutions. The largest of the latter was the
Arab Fund for Economic and Social Development (AFESD), through
which was proposed the 1976 program to develop Sudan as a
breadbasket for the Arab world. The implementing agency, the Arab
Authority for Agricultural Investment and Development (AAAID),
was established in Khartoum, based on an agreement signed in
November 1976 by twelve Arab states. After the mid-1970s, Saudi
Arabia, one of the founders of AAAID, through its Saudi
Development Fund became the largest source of investment capital,
apparently convinced that Sudan's development could complement
its own, especially in making up its large food deficits.
Unfortunately, the ambitious plans for Sudan's becoming the Arab
world's major food source faded by the mid-1980s into an economic
nightmare as agricultural production declined sharply.
In 1977 the United States resumed economic (and military) aid
to Sudan. This aid followed a ten-year lapse beginning with a
break in diplomatic relations between the two countries in 1967,
with relations restored in July 1972
(see United States
, ch. 4).
In 1977 the United States had become concerned about geopolitical
trends in the region, particularly potential Libyan or Marxist
Ethiopian attempts to overthrow the pro-Western Nimeiri
government. In the five-year period 1977-81, United States
economic aid amounted to almost US$270 million, of which twothirds was in the form of grants. By 1984, when the United States
had become Sudan's largest source of foreign aid, the country's
worsening economic and political situation, particularly
Nimeiri's domestic policies with regard to the south and the
imposition of the sharia (Islamic law) on society, caused the
United States to suspend US$194 million of aid. In 1985,
following Nimeiri's visit to Washington, the United States
provided Sudan with food aid, insecticides, and fertilizers.
After Nimeiri's overthrow in April 1985 and Sudan's failure to
make repayments on loans, the United States discontinued non-food
aid. The aid had been administered by the United States Agency
for International Development (USAID). It not only included
direct funds for projects and project assistance through
commodity imports (mainly wheat under the Food for Peace
Program), but also generated local currency that was used to
support general development activities. USAID continued providing
humanitarian relief assistance to distressed regions in Sudan
through early 1991.
Britain also made substantial aid contributions to Sudan,
notably the sum of US$140 million to the Power III Project in the
1980s
(see Electric Power
, this ch.). In January 1991, Britain
suspended its development aid to Sudan, which had amounted to
US$58 million in 1989, while continuing humanitarian aid. This
policy change was caused by a number of factors, including
alleged terrorist activities by Sudanese agents against Sudanese
expatriates in Britain. In addition to Britain, France, West
Germany, Norway and other countries, EC have provided significant
economic or humanitarian aid to Sudan (Britain, Japan, West
Germany, and the Netherlands also have been Sudan's main sources
of imports). Japan is a major buyer of Sudanese cotton, while
Sudan imports Japanese machinery. In early 1990, to ease Sudan's
debt burden, the Danish government cancelled Sudan's outstanding
debt totalling more than US$22.9 million. Other major financial
assistance came from Arab countries, especially from Saudi Arabia
(Sudan's largest importer) and Kuwait. By December 1982, Sudan
owed the Persian Gulf states US$2 billion. Saudi Arabia's
assistance after 1980 mainly took the form of balance of payments
support and petroleum shipments, rather than project aid. The
total amount of aid from Arab states dropped in 1988 to only
US$127 million, the lowest figure since the late 1970s. Arab aid
totaled US$215 million in 1985, US$208 million in 1986, and
US$228 million in 1987. Sudan's support of Iraq in the 1991
Persian Gulf war alienated the Gulf states and Saudi Arabia,
sharply curtailing their economic aid to Khartoum. The
increasingly close ties between Sudan and Iran in the early 1990s
also concerned the Gulf states and Saudi Arabia and was a factor
in their diminished financial aid to Khartoum. Economic
cooperation was initiated with Libya in the late 1980s, with
Libya becoming Sudan's third largest supplier in 1989.
In mid-1991 the World Bank announced its decision to close
its Khartoum office by December 31, 1991. The decision resulted
from the deterioration in relations between Sudan and
international monetary bodies following cessation of debt
repayment by Khartoum to the World Bank and the IMF.
Among communist countries, prior to the collapse of communist
regimes in the Soviet Union and Eastern Europe, China had been
the most important provider of development funds. By 1971 it had
furnished loans equivalent to US$82 million, and through 1981 an
additional US$300 million was reported to have been made
available. Sudan valued these loans because they were interest
free and had long grace periods before repayments started.
Economic cooperation with China continued into the 1980s. Sudan
and China signed a trade cooperation protocol in March 1989, with
technical agreements also renewed. A commercial protocol between
the two countries was signed in April 1990. China remained a
significant importer of Sudanese cotton in the mid-1980s, while
Sudan imported about US$76 million in goods from China in 1988.
Relations between Sudan and the Soviet Union improved markedly
following Nimeiri's overthrow in 1985, but the overthrow did not
result, as Khartoum had hoped, in Soviet economic assistance, but
rather in a decrease in United States aid.
Data as of June 1991
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